STATE AND PROSPECTS FOR THE DEVELOPMENT OF THE UKRAINIAN IT INDUSTRY

Abstract

The Ukrainian IT industry stands as a cornerstone of the nation’s economic resilience, particularly under the duress of geopolitical instability and ongoing military conflict. As a leading contributor to Ukraine’s GDP and one of the primary sources of export revenue, the IT sector has grown significantly over recent years, establishing itself as a critical engine for economic development and a symbol of Ukraine’s technological capabilities on the global stage. The industry’s growth trajectory has been marked by consistent expansion in service exports, increased demand for specialized skills, and a robust talent pool that has attracted international clients seeking high-quality outsourcing solutions. However, recent developments, including the full-scale war and its subsequent economic and social impacts, have introduced unprecedented challenges that threaten to destabilize the industry’s progress and hinder its potential for future growth. With the growing importance of digital services and cybersecurity on the global stage, alignment with international standards, particularly those of the European Union, is crucial for the sector’s credibility and integration into the global market. A comprehensive legal framework that addresses data protection, intellectual property rights, and cybersecurity is essential for establishing trust among international clients and investors. However, the existing regulatory landscape in Ukraine remains fragmented, with gaps in key areas that are necessary for fostering a secure and competitive digital economy. Legislative reforms that bring Ukraine’s regulatory standards in line with international best practices are not only necessary for attracting investment but are also crucial for safeguarding the industry’s long-term viability. The purpose of this paper is to analyze the current state of Ukraine’s IT industry, focusing on the challenges it faces in the areas of taxation, talent retention, and regulatory alignment. By examining these challenges in detail, the paper aims to provide a set of strategic recommendations that can help the industry navigate these complexities and build a foundation for sustainable growth. This includes advocating for gradual tax policy adjustments that balance fiscal needs with competitive pressures, enhancing education and professional development programs to mitigate talent migration, and establishing a harmonized regulatory framework that aligns with EU standards. The paper also explores the importance of integrating Ukraine into global innovation networks, such as EU-funded digital initiatives, which offer opportunities for collaboration on joint projects, technology transfer, and knowledge exchange. Active participation in international innovation ecosystems will position Ukraine as a valuable partner within Europe and increase its attractiveness as an investment destination.